The USD Is Still Held Under Pressure - 23.7.2013

The US dollar remains under pressure, losing its positions vs. major competitors. The US dollar index has gotten close to the support level at 82.00 after the weak housing data coming out last night.

On Tuesday, the Japanese government improved its forecast for economic growth and it also stated that the country has managed to avoid deflation, due to monetary incentives and higher public expenditure. Meanwhile the USDJPY dropped below 100 again – during the morning trading it is around 99.50.

European currency also managed to strengthen against the dollar, partly due to lower political tensions in Portugal. The President said that the government will keep its hands on the steering wheel to ensure the implementation of international assistance programs. This statement helped to reduce the Portuguese bonds yield and to comfort investors.

The British pound has overcome the resistance at 1.53 vs. the US dollar, approaching the next key level at 1.5395. The Swiss franc rose yesterday to a 4-week high so the USDCHF dropped down to 0.93. The Canadian dollar also hit monthly highs sticking around 1.03. Finally, the Australian dollar vs. the US dollar is trading slightly lower than 0.93 around monthly peaks.

All the movement in the market is in accordance with being characterized as the corrective. From a fundamental point of view, the US currency weakness should not last for long. Current market expectations are preparing the basic instruments for a reversal. The next week will be the key period, in this regard, as it is going to be full of extremely important data and events, including the Fed meeting, the labor market data and the US economy growth rate. The good data from the United States can provide the US dollar reverse against all currencies, strengthening for the third consecutive week.